Effective distribution of an innovative
product epitomizes a challenge faced by many companies in the information
technology industry. Chief marketing officers around the globe are constantly
in search for the most successful way in which to market a product. In the
early phases of the IT industry, conventional strategies were adopted whereby
the entire good or service had an associated price. Nevertheless, the IT market
landscape has undergone a myriad of changes particularly in the past couple of
decades. Money invested into the information technology industry continues to
increase. The market rose from US $2,081.9 billion in 2014 to $2,199.3 billion in
2015 with the Interactive Data Corporation (IDC) predicting that it will peak
at $2,461.1 billion by 2019. As a result of this, the Internet penetration rate
and user count has grown overwhelmingly and several companies have introduced
online software distribution models, for example online marketplaces such as
Microsoft online store and Apple App Store.

Akin to this, Freemium, a new software
business model has surfaced. It is a culmination of the “free” and “premium”
services available for a particular product. In summary, this model, for free,
gives away a specific level of consumption whilst profiting from the
consumption of the premium level.

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Freemium can be most commonly found in two
models which are feature-limited freemiums (FLF) and time-limited freemiums
(TLF).